Caterpillar announces mass layoffs

Friday

Jan 30, 2009 at 12:01 AMJan 30, 2009 at 6:51 PM

Caterpillar Inc. said Friday it will lay off more than 2,000 full-time production employees from three Illinois facilities. More than 400 support and management personnel also will be let go, the company said. The layoffs will begin April 13, the company said. Under federal labor law, the company must give 60 days notice of a mass layoff.

Paul Gordon

When Caterpillar Inc. warned on Monday that more layoffs were possible, even likely in some cases, few thought they would come four days later.

But the company, saying it still needed to bring production in line with falling demand, pulled the trigger Friday on more than 2,000 more full-time production jobs and more than 400 salaried positions. More than 700 employees will be laid off in East Peoria, according to figures released by the company.

That brings the total Caterpillar layoffs since early December to more than 22,000 employees, including contract and agency workers.

The layoffs announced Friday will begin April 13, the company said. Under federal labor law, the company must give 60 days notice of a mass layoff.

A total of 2,110 production employees at plants in East Peoria, Aurora and Decatur will be laid off indefinitely “to bring production levels in line with current demand,” the company said in a news release.

In East Peoria, 584 employees will be let go at plants where track-type tractors and pipelayers are manufactured, while 1,026 workers in Decatur’s off-highway trucks and motor graders plant and 500 in Aurora, where wheel loaders and hydraulic excavators are made, will be laid off.

In addition, 416 support and management workers will be indefinitely laid off. Of those, 174 are in East Peoria, 146 are in Decatur and 96 are in Aurora.

The company further warned Friday’s actions don’t signal the end of layoffs.

“These actions are in response to lower demand for products made at the Illinois facilities. As previously announced, Caterpillar is rapidly executing strategic ‘trough’ plans and implementing actions throughout the company to deal with a very challenging global business environment,” the release said.

“Depending on business conditions, more layoffs and separations may be required as the year unfolds.”

On Monday, when it announced its year-end 2008 financials, Caterpillar said it was likely up to 5,000 support and management staff would be laid off in addition to the 2,500 that previously accepted the company’s offer of an early buyout. The 546 salaried employees given notice Friday were among those 5,000, said Caterpillar spokesman Jim Dugan.

Dugan said it’s possible that if business conditions improve, employees could start getting recalled down the road. He said Caterpillar considers the layoffs indefinite, but refers to them as permanent in language required by the U.S. Department of Labor.

Under the Worker Adjustment and Retraining Notification Act (WARN), the federal law that requires 60 days’ notice of a mass layoff, any layoffs that are expected to be for six months or longer must be referred to as permanent.

Other previously announced cost-cutting actions include plans for rolling, temporary shutdowns of several facilities, shortened work weeks, hiring freezes and suspension of pay raises for management and salaried workers, reductions in compensation for senior executives and reductions in capital expenditures.

“It is never easy to take steps that impact the lives of our employees and their families,” said Bob Williams, Caterpillar vice president for the Americas Operations Division that includes the facilities in Aurora, Decatur and East Peoria. “But over the last few months, recessionary conditions have had a very negative impact on our customers and we must drastically reduce our production levels and cost structure in order to remain competitive for the long run.”

The timing of the layoff announcement Friday took employees and their union by surprise, said Rick Doty, president of United Auto Workers Local 974 in East Peoria.

“We were expecting more layoffs to come eventually, but not this soon,” he said. “From what we were hearing from guys in the shop about what was going on with orders and all, we didn’t expect it until later. We just thought we’d have some of the temporary rolling plant shutdowns. So, apparently the demand levels dropped even more than was expected.”

Doty said he remembers what it was like in 1983 when he was indefinitely laid off from his job in East Peoria, with a wife and four children at home. It was three years before he was called back.

“This tears me up inside. It hits you right in the gut knowing some of these guys with young kids and a mortgage and car payments … wondering what they’re going to do. I’ve been there. It’s tough,” Doty said.

Caterpillar, when it announced Monday that its fourth quarter profit fell 32 percent from the previous year, said 2009 would be a tough year and warned then more layoffs were likely in the first quarter.

Paul Gordon can be reached at (309) 686-3288 or pgordon@pjstar.com.

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